Tata Capital shares have 'limited upside' JM Financial says ahead of listing

Tata Capital Ltd., the biggest Indian IPO of the year, has received its first recommendation from an analyst, on Monday, October 13, the day of its listing.

Brokerage firm JM Financial has initiated coverage on Tata Capital with an "Add" recommendation, and a price target of ₹360 per share. The price target implies a potential upside of 10.4% from the upper end of the IPO price band of ₹326 per share.

JM Financial said that Tata Capital enjoys easy access to funds at lower interest rates, as it has the highest credit rating of AAA with a stable outlook.

The brokerage expects Tata Capital's Assets Under Management to grow at a Compounded Annual Growth Rate (CAGR) of 20% and its net profit to grow at a 34% CAGR over financial year 2025-2027.

However, at the upper end of the price band, the valuations are likely to be at 2.7 times financial year 2027 estimated price-to-book value, which limits the upside potential for the stock, according to the JM Financial note.

The Tata Capital IPO saw overall subscription of 1.98 times the total number of shares on offer. The subscription was led by institutional investors, while the retail portion just about managed to see full subscription.